By Swati Pandey
SYDNEY, Oct 3 (Reuters) - The Australian and New Zealand dollars stayed weak against the safe haven yen on Thursday while two-year bonds hit record highs as disappointing U.S. data fuelled worries about a sharper global slowdown, driving investors away from riskier assets.
The antipodean currencies, which are often traded as a liquid proxy for risk, held in tight ranges against the U.S. dollar.
The Aussie AUD=D3 was up 0.1% at 0313 GMT at $0.6715, but not far from a 10-1/2 year trough of $0.6670 touched earlier in the week. The kiwi dollar NZD=D3 eased 0.1% to $0.6263 to stay within spitting distance of this week's four-year low of $0.6204.
Against the Japanese yen, the Aussie AUDJPY=R and the kiwi NZDJPY=R held near one-month lows.
Risk sentiment soured overnight after data showed hiring by U.S. private employers had slowed in September, the latest indicator that the Sino-U.S. trade dispute is hurting the world's largest economy. data came on the heels of a survey on Tuesday showing manufacturing activity in the world's largest economy tumbled to a more than 10-year low in September.
The weak data "has meant U.S. equities have been underperforming and AU-U.S. rate differentials have actually moved modestly in favour of the AUD," said Tom Nash, Sydney-based rates and forex strategist at HSBC.
"AUD/JPY would be a better indicator of risk sentiment in this case and has responded as you would expect, falling 1.4% over the last two trading sessions."
Closer to home, investor attention was on a monthly report showing Australia extended its golden stretch of trade surpluses into August, with demand for iron ore and farm goods staying strong.
Trade balance for August eased to a surplus of A$5.9 billion from a surplus of A$7.2 billion in July largely due to a drop in iron ore prices in the month.
That means contribution from exports to Australia's third-quarter economic growth was likely to be much smaller than the 0.6 percentage point (ppt) boost in the second quarter, according to Capital Economics.
"We estimate that net trade made a modest 0.1 ppt contribution to GDP growth in the third quarter," Capital Economics said in a note.
"And given the weakness in import values, we suspect the recovery in domestic demand has been sluggish so far. That's why we expect the RBA to cut rates again in December."
The Reserve Bank of Australia (RBA) has already cut rates three times this year to a record low of 0.75% to revive a slowing economy. Financial futures 0#YIB: imply a 50-50 chance of a fourth move as soon as next month.
Yields on two- and three-year Australian bonds AU2YT=RR AU3YT=RR slipped to around 60 basis points. Those on two-year New Zealand bonds NZ2YT=RR slippd to nearly 73 basis points, the lowest ever. (Editing by Shri Navaratnam)